MPs vote to raise cigarette prices in order to meet EU directive

Photo: Kristýna Maková

The price of cigarettes in the Czech Republic is due to rise by up to four crowns for a pack of 20. Wednesday’s approval of the price hike in the lower house followed a fall in the value of the crown that left the Czech Republic in contravention of a new EU guideline on excise duty.

Photo: Filip Jandourek
In January the price of 20 cigarettes in the Czech Republic was increased by two crowns to around 70 crowns.

Now smokers will have to reach a little deeper into their pockets once again, after MPs voted on Wednesday to amend the law on value-added tax to increase the cost of a pack by up to four crowns.

However, the government has had little choice but to push through the price rise.

The European Union implemented a directive at the start of this year under which the excise duty on 1,000 cigarettes may not be less than EUR 90.

Photo: Kristýna Maková
A weakening of the Czech crown induced late last year means the Czech Republic would have failed to meet that directive without the fresh rise in VAT on cigarettes. Such a failure would have led to EU sanctions.

The bill now has to go before the Senate and be signed by the president. The minister of finance, Andrej Babiš, had warned that failure to implement the legislation soon would lead to even higher prices – as the crown would likely be even weaker against the euro.

“If the law doesn’t come into force by September 30, 2014, a new higher rate of VAT would have to be introduced on the basis of the exchange rate as of the first working day of October. That rate is likely to still be markedly affected by the Czech National Bank’s intervention last November. A new, higher VAT rate would have a marked impact on the domestic market and compared to today the price of a box of 20 would rise by six to seven crowns.”

Andrej Babiš,  photo: Filip Jandourek
As it is, the change approved on Wednesday will bring an estimated CZK 2.8 billion in extra VAT into the state coffers next year.

Meanwhile, Mr. Babiš’s ANO party have put forward a proposal for a blanket ban on smoking in Czech bars and restaurants, as has the Social Democrat minister of health, Svatopluk Němeček. However, numerous attempts to introduce such a prohibition in the past have come to nothing.

An estimated 30 percent of Czechs smoke cigarettes, with around 18,000 people dying as a result of smoking in this country annually.